Correlation Between GDI Integrated and Canopy Growth

Can any of the company-specific risk be diversified away by investing in both GDI Integrated and Canopy Growth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GDI Integrated and Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GDI Integrated and Canopy Growth Corp, you can compare the effects of market volatilities on GDI Integrated and Canopy Growth and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GDI Integrated with a short position of Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDI Integrated and Canopy Growth.

Diversification Opportunities for GDI Integrated and Canopy Growth

-0.6

Correlation Coefficient

GDI Integrated  Canopy Growth

Excellent diversification

The 3 months correlation between GDI and Canopy is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp and GDI Integrated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GDI Integrated are associated (or correlated) with Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of GDI Integrated i.e., GDI Integrated and Canopy Growth go up and down completely randomly.

Pair Corralation between GDI Integrated and Canopy Growth

Assuming the 90 days trading horizon GDI Integrated is expected to generate 0.17 times more return on investment than Canopy Growth. However, GDI Integrated is 5.75 times less risky than Canopy Growth. It trades about -0.01 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about -0.01 per unit of risk. If you would invest  4,627  in GDI Integrated on October 4, 2024 and sell it today you would lose (702.00) from holding GDI Integrated or give up 15.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GDI Integrated  vs.  Canopy Growth Corp

GDI Integrated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Canopy Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GDI Integrated and Canopy Growth

The main advantage of trading using opposite GDI Integrated and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDI Integrated position performs unexpectedly, Canopy Growth can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canopy Growth will offset losses from the drop in Canopy Growth's long position.

The idea behind GDI Integrated and Canopy Growth Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.